FCC takes a big step toward Lifeline broadband

In a victory for CYC, the National Digital Inclusion Alliance and many other digital equity advocates across the U.S., the Federal Communications Commission voted 3-2 on Thursday to approve new rules for the Federal Lifeline program that could — eventually — create many more affordable broadband options for low-income households across the country.The decision, which concludes a “Lifeline Modernization” proceeding that began last May, is another important milestone in a long struggle by the FCC majority — notably Commissoner Mignon Clyburn, but also Chairman Wheeler and their Democratic colleague, Commissioner Rosenworcel — to break down the broadband cost barrier that keeps millions of lower-income citizens off the Internet. An earlier milestone, the agreement brokered by Clyburn in the AT&T/DirectTV merger case, will make $10 home broadband available to 150,000+ low income households in Cleveland and Detroit in just a few weeks.

The FCC’s decision on Thursday won’t have that kind of immediate or drastic impact. It doesn’t create new Universal Service Fund subsidies for Internet service (in fact, it puts new spending limits on the overall Lifeline program).  The Lifeline subsidy for eligible low income households will remain a flat $9.25 a month.  The soonest that service providers can start applying that subsidy to Internet service, instead of just voice and text, will apparently be December 1.

But the decision opens some important doors for providers that the FCC expects (with good reason, IMHO) to lead to large-scale benefits for consumers, as soon as next year:

1) Providers can start offering Lifeline-subsidized Internet to low income consumers, as an alternative to voice and text, or as part of a bundle. If it’s “fixed” home service — i.e. DSL, cable, satellite — that Internet service must meet minimum speed and monthly data standards (10 mbs down, 150 gb per month) that make all kinds of IP enabled applications, including low-cost IP phone, very feasible. (The speed and date requirement for mobile broadband providers are much weaker.)

2) New providers — notable cable companies, but possibly public or nonprofit networks as well — can qualify to provide broadband-only Lifeline services, without jumping through state-level regulatory hoops.  Comcast and Charter, soon to be #1 and #2 in the U.S. cable market, gave strong support to the new rules, so it’s a fair bet that they have ideas about the possibilities.  This guarantees strong competitive pressure on current Lifeline phone providers — who are overwhelmingly wireless  — to develop competitively priced phone/text/data bundles, and/or mobile hotspot options.

3) The new rules will apparently require Lifeline-subsidized mobile devices, including phones, to have wifi functionality — so even a consumer with a minimal data plan will have Internet access through public hotspots.

So essentially, the FCC is inviting a bunch of new providers and technology options into the Lifeline market, with only one real requirement… figure out how to get reasonably fast Internet access to poor people, cheap.

Will this produce the broadband equivalent of the mythical Obamaphone — free Internet for all?  Or even $10 Internet for all? No, and not very likely.

For example: AT&T;’s current monthly charge for standalone 6 mpbs DSL, where they offer it, is about $50 after the promotional year.  Even assuming the company increases the speed to the FCC”s required 10 mbps, with the $9.25 Lifeline subsidy it would still cost about $40 a month — by itself, not a very “affordable” solution.

The success of the new Lifeline policy in creating robust broadband options that are truly affordable for low-income customers will depend on a whole lot of innovation, both in technology and business models, over the next year or two.  What the policy offers to motivate innovators toward this goal is the prospect of a stream of Federal subsidies — not very large, but steady and reliable.

Among potential Lifeline broadband innovators, some of the most interesting are noncommercial Internet providers — municipal and community networks, nonprofit 4G resellers, etc. — for whom $9.25 per user per month could represent a significant new revenue source.  NDIA and other digital inclusion groups argued strongly that the FCC should encourage these nontraditional providers to be part of the modernized Lifeline program. We won’t know whether the rules governing the new category of “Broadband Lifeline Providers” will be friendly to this idea until the actual language of the order is pubished a week or two from now.


There’s one other really promising part of Thursday’s decision, which probably wouldn’t be in there without the efforts of the National Digital Inclusion Alliance — a commitment  by the FCC to “bring together a variety of stakeholders to determine how Lifeline can best be used to close the digital divide.”  I’ll let NDIA’s Angela Siefer explain what that means and why it matters.